Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 15, 2018 | |
Details | ||
Registrant Name | ALPHA ENERGY INC | |
Registrant CIK | 855,787 | |
SEC Form | 10-Q | |
Period End date | Mar. 31, 2018 | |
Fiscal Year End | --12-31 | |
Trading Symbol | alpha | |
Tax Identification Number (TIN) | 901,020,566 | |
Number of common stock shares outstanding | 17,016,428 | |
Filer Category | Smaller Reporting Company | |
Current with reporting | Yes | |
Voluntary filer | No | |
Well-known Seasoned Issuer | No | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Incorporation, State Country Name | Colorado | |
Entity Address, Address Line One | 4162 Meyerwood Drive | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77,025 | |
City Area Code | 713 | |
Local Phone Number | 231-4235 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 921 | $ 1,061 |
Account receivable | 2,825 | 1,285 |
Total current assets | 3,746 | 2,346 |
Total assets | 3,746 | 2,346 |
Current liabilities: | ||
Accounts payable | 35,016 | 14,759 |
Interest payable | 4,942 | 3,192 |
Derivative Liability, Current | 318,596 | 238,674 |
Total current liabilities | 358,554 | 256,625 |
Convertible Credit line payable - related party, net of discount of $73,927 and $68,005, respectively | 38,519 | 22,861 |
Asset retirement obligation | 653 | 635 |
Liabilities | 397,726 | 280,121 |
Shareholders' deficit: | ||
Preferred shares | 0 | 0 |
Common shares | 1,702 | 1,702 |
Additional paid-in capital | 101,378 | 101,378 |
Accumulated deficit | (497,060) | (380,855) |
Total shareholders' deficit | (393,980) | (277,775) |
Total liabilities and shareholders' deficit | $ 3,746 | $ 2,346 |
Balance Sheets (Unaudited) - Pa
Balance Sheets (Unaudited) - Parenthetical - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Debt Instrument, Unamortized Discount, Current | $ 73,927 | $ 68,005 |
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 65,000,000 | 65,000,000 |
Common Stock, Shares, Issued | 17,016,428 | 17,016,428 |
Common Stock, Shares, Outstanding | 17,016,428 | 17,016,428 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Details | ||
Revenues | $ 1,540 | $ 527 |
Lease operating expenses | 842 | 316 |
Gross Profit | 698 | 211 |
Operating expenses: | ||
Professional services | 22,183 | 9,095 |
General and administrative expenses | 18,971 | 2,817 |
Total operating expenses | 41,154 | 11,912 |
Operating loss | (40,456) | (11,701) |
Other Nonoperating Income (Expense) | ||
Interest expense | (17,407) | (524) |
Loss on initial measurement of derivative liability | (38,528) | 0 |
Loss on fair market value of derivative liability | (19,814) | 0 |
Nonoperating Income (Expense) | (75,749) | (524) |
Provision for income taxes | 0 | 0 |
Net Income (Loss) | $ (116,205) | $ (12,225) |
Basic and diluted net loss per common share | $ (0.01) | $ 0 |
Basic and diluted weighted-average common shares outstanding | 17,016,428 | 17,016,428 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net Cash Provided by (Used in) Operating Activities | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (116,205) | $ (12,225) |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities | ||
Debt discount amortization | 15,658 | 0 |
Excess fair market value of initial measurement of derivative liability | 38,528 | 0 |
Loss on fair market value of derivative liability | 19,814 | 0 |
Asset retirement obligation expense | 18 | 16 |
Changes in operating assets and liabilities: | ||
Increase (Decrease) in Prepaid Expense | 0 | (10,247) |
Account receivable | (1,540) | 0 |
Increase (Decrease) in Accounts Payable | 20,257 | (11,470) |
Interest payable | 1,750 | 283 |
Net Cash Provided by (Used in) Operating Activities, Continuing Operations | (21,720) | (33,643) |
Net Cash Provided by (Used in) Investing Activities | ||
Loan to related parties | 0 | (445) |
Net Cash Provided by (Used in) Investing Activities | 0 | (445) |
Net Cash Provided by (Used in) Financing Activities | ||
Proceeds from notes payable | 0 | 56,216 |
Proceeds from convertible credit line payable - related party | 21,580 | 0 |
Repayments of related party loans | 0 | (18,285) |
Net Cash Provided by (Used in) Financing Activities | 21,580 | 37,931 |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 1,061 | 453 |
Cash and Cash Equivalents, Period Increase (Decrease) | (140) | 3,843 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 921 | 4,296 |
Supplemental Cash Flow Information | ||
Interest Paid | 0 | 0 |
Income Taxes Paid, Net | 0 | 0 |
Cash Flow, Noncash Investing and Financing Activities Disclosure | ||
Debt discount on convertible credit line payable - related party | 21,580 | 0 |
Payment of expenses by related party on behalf of the Company | $ 0 | $ 2,630 |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 1 - Basis of Presentation | NOTE 1 BASIS OF PRESENTATION The accompanying unaudited interim financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows as of March 31, 2018, and for all periods presented herein, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. It is suggested that these unaudited interim financial statements be read in conjunction with the financial statements and notes thereto included in the Companys December 31, 2017 audited financial statements. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the operating results for the full year. Related party policy In accordance with ASC 850, the Company discloses: the nature of the related party relationship(s) involved; a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Revenue and Cost Recognition The Company records revenues from the sales of natural gas and crude oil when the production is produced and sold, and also when collectability is ensured. The Company may in the future have an interest with other producers in certain properties, in which case the Company will use the sales method to account for gas imbalances. Under this method, revenue will be recorded on the basis of natural gas actually sold by the Company. The Company also reduces revenue for other owners natural gas sold by the Company that cannot be volumetrically balanced in the future due to insufficient remaining reserves. The Companys remaining over- and under-produced gas balancing positions are considered in the Companys proved oil and natural gas reserves. The Company had no gas imbalances at March 31, 2018 or December 31, 2017. The Company recorded revenues of $1,540 and $527 and costs of revenues totaling $842 and $316 during the three months ended March 1, 2018 and 2017. There was $2,825 and $1,285 of accounts receivable at March 31, 2018 and December 31, 2017. In April 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" ("ASU 2016-1O"). The amendments in this update clarify the following two aspects to Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The entity first identifies the promised goods or services in the contract and reduces the cost and complexity. An entity evaluates whether promised goods and services are distinct. Topic 606 includes implementation guidance on determining whether an entity's promise to grant a license provides a customer with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). The Company adopted these standards at the beginning of the first quarter of fiscal 2018 using the modified retrospective method. The adoption of these standards did not have an impact on the Company's consolidated statements of operations for any periods presented. Derivative Liabilities The Company records a debt discount related to the issuance of convertible debts that have conversion features at adjustable rates. The debt discount for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features. The debt discount will be accreted by recording additional non-cash gains and losses related to the change in fair market values of derivative liabilities over the life of the convertible notes. |
Note 2 - Going Concern
Note 2 - Going Concern | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 2 - Going Concern | NOTE 2 GOING CONCERN The Companys interim unaudited financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. These conditions raise substantial doubt about the Companys ability to continue as a going concern for a period of twelve months from the date of issuance of this report. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Managements plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Note 3 - Related Party Transact
Note 3 - Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 3 - Related Party Transactions | NOTE 3 RELATED PARTY TRANSACTIONS The Company neither owns nor leases any real or personal property. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts. The Chief Financial Officer allows the use of his residence as an office for the Company at no charge. During the three months ended March 31, 2018, the Company received advances totaling $21,580 from AEI Acquisition Company, a majority shareholder, from its convertible credit line. See Note 4 Convertible Credit Line Payable Related Party |
Note 4 - Convertible Credit Lin
Note 4 - Convertible Credit Line Payable - Related Party | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 4 - Convertible Credit Line Payable - Related Party | NOTE 4 CONVERTIBLE CREDIT LINE PAYABLE RELATED PARTY On September 1, 2017, the Company entered into a convertible credit line agreement to borrow up to $500,000. On the same date, the outstanding balance on a note payable of $87,366 was exchanged as a draw on the credit line. The loan modification is considered substantial under ASC 470-50. The outstanding balance accrues interest at a rate of 7% per annum and the outstanding balance is convertible to common stock of the Company at the lesser of the close price of the common stock as quoted on the OTCBB on the day interest is due and payable immediately preceding the conversion or $1.50. The Company analyzed the conversion options in the convertible line of credit for derivative accounting consideration under ASC 815, Derivative and Hedging, and determined that the transaction does qualify for derivative treatment. The Company measured the derivative liability and recorded a debt discount of $87,366 upon initial measurement. During the year ended December 31, 2017, the Company amortized $19,361 of the discount as interest expense leaving an unamortized discount of $68,005 as of December 31, 2017. See discussion of derivative liability in Note 5 Derivative Liability. The Company made payments of $2,000 on the credit line during the year ended December 31, 2017 and received additional advances of $5,500. There was $90,866 of principal and $3,192 of accrued interest outstanding as of December 31, 2017. As of December 31, 2017 there was an unamortized debt discount of $68,005 resulting in a net balance represented on the balance sheet of $22,861. During the three months ended March 31, 2018, the Company received additional advances of $21,580 and made no repayments. Additionally, the Company recorded a debt discount of $21,580 related to the additional advances. There was $112,446 of principal and $4,942 of accrued interest outstanding as of March 31, 2018. During the three months March 31, 20185, the amortized $15,658 of debt discount. As of March 31, 2018, there was an unamortized debt discount of $73,927 resulting in a net balance represented on the balance sheet of $38,519. |
NOTE 5 - DERIVATIVE LIABILITY
NOTE 5 - DERIVATIVE LIABILITY | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
NOTE 5 - DERIVATIVE LIABILITY | NOTE 5 DERIVATIVE LIABILITY As discussed in Note 1, on a recurring basis, we measure certain financial assets and liabilities based upon the fair value hierarchy. The following table presents information about the Companys liabilities measured at fair value as of March 31, 2018 and December 31, 2017: Level 1 Level 2 Level 3 Fai r Value at March 31, 2018 Liabilities Derivative Liability $ - $ - $ 318,596 $ 318,596 Level 1 Level 2 Level 3 Fair Value at December 31, 2017 Liabilities Derivative Liability $ - $ - $ 238,674 $ 238,674 As of March 31, 2018, the Company had a $318,596 derivative liability balance on the balance sheet and recorded a loss from derivative liability fair value adjustment of $19,814 during the three months ended March 31, 2018. The Company assessed its outstanding convertible credit line payable as summarized in Note 4 Convertible Credit Line Payable- Related Party ASC 920, Fair Value Measurements and Disclosures ASC 825, Financial Instruments. Utilizing Level 3 Inputs, the Company recorded fair market value adjustments related to convertible notes payable for the three months ended March 31, 2018 of $19,814. The fair market value adjustments as of March 31, 2018 were calculated utilizing a max valuation method using the following assumptions: exercise price of $1.50, 74,964 common shares the balance can be converted into and a stock price at measurement date of $4.25. A summary of the activity of the derivative liability for the year ended December 31, 2017 is shown below: Balance at December 31, 2016 $ - Derivative liabilities recorded 87,366 Day one loss 2,912 Change due to note conversion - Loss on change in derivative fair value adjustment 148,396 Balance at December 31, 2017 $ 238,674 A summary of the activity of the derivative liability for the three months ended March 31, 2018 is shown below: Balance at December 31, 2017 $ 238,674 Derivative liabilities recorded 21,580 Day one loss 38,528 Change due to note conversion - Loss on change in derivative fair value adjustment 19,814 Balance at March 31, 2018 $ 318,596 |
Note 1 - Basis of Presentation_
Note 1 - Basis of Presentation: Related party policy (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Related party policy | Related party policy In accordance with ASC 850, the Company discloses: the nature of the related party relationship(s) involved; a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. |
Note 1 - Basis of Presentatio12
Note 1 - Basis of Presentation: Revenue and Cost Recognition (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Revenue and Cost Recognition | Revenue and Cost Recognition The Company records revenues from the sales of natural gas and crude oil when the production is produced and sold, and also when collectability is ensured. The Company may in the future have an interest with other producers in certain properties, in which case the Company will use the sales method to account for gas imbalances. Under this method, revenue will be recorded on the basis of natural gas actually sold by the Company. The Company also reduces revenue for other owners natural gas sold by the Company that cannot be volumetrically balanced in the future due to insufficient remaining reserves. The Companys remaining over- and under-produced gas balancing positions are considered in the Companys proved oil and natural gas reserves. The Company had no gas imbalances at March 31, 2018 or December 31, 2017. The Company recorded revenues of $1,540 and $527 and costs of revenues totaling $842 and $316 during the three months ended March 1, 2018 and 2017. There was $2,825 and $1,285 of accounts receivable at March 31, 2018 and December 31, 2017. In April 2016, the FASB issued ASU 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing" ("ASU 2016-1O"). The amendments in this update clarify the following two aspects to Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The entity first identifies the promised goods or services in the contract and reduces the cost and complexity. An entity evaluates whether promised goods and services are distinct. Topic 606 includes implementation guidance on determining whether an entity's promise to grant a license provides a customer with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). The Company adopted these standards at the beginning of the first quarter of fiscal 2018 using the modified retrospective method. The adoption of these standards did not have an impact on the Company's consolidated statements of operations for any periods presented. |
Note 1 - Basis of Presentatio13
Note 1 - Basis of Presentation: Derivative Liabilities (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Derivative Liabilities | Derivative Liabilities The Company records a debt discount related to the issuance of convertible debts that have conversion features at adjustable rates. The debt discount for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features. The debt discount will be accreted by recording additional non-cash gains and losses related to the change in fair market values of derivative liabilities over the life of the convertible notes. |
NOTE 5 - DERIVATIVE LIABILITY_
NOTE 5 - DERIVATIVE LIABILITY: Fair Value, Assets and Liabilities measured on recurring basis (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Fair Value, Assets and Liabilities measured on recurring basis | Level 1 Level 2 Level 3 Fai r Value at March 31, 2018 Liabilities Derivative Liability $ - $ - $ 318,596 $ 318,596 Level 1 Level 2 Level 3 Fair Value at December 31, 2017 Liabilities Derivative Liability $ - $ - $ 238,674 $ 238,674 |
NOTE 5 - DERIVATIVE LIABILITY15
NOTE 5 - DERIVATIVE LIABILITY: Schedule of Derivative Liability Activity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Derivative Liability Activity | Balance at December 31, 2016 $ - Derivative liabilities recorded 87,366 Day one loss 2,912 Change due to note conversion - Loss on change in derivative fair value adjustment 148,396 Balance at December 31, 2017 $ 238,674 A summary of the activity of the derivative liability for the three months ended March 31, 2018 is shown below: Balance at December 31, 2017 $ 238,674 Derivative liabilities recorded 21,580 Day one loss 38,528 Change due to note conversion - Loss on change in derivative fair value adjustment 19,814 Balance at March 31, 2018 $ 318,596 |
Note 3 - Related Party Transa16
Note 3 - Related Party Transactions (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Details | |
Debt conversion, Notes payable to Convertible Line of Credit | $ 21,580 |
Note 4 - Convertible Credit L17
Note 4 - Convertible Credit Line Payable - Related Party (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Amortization of Debt Discount (Premium) | $ 19,361 | |
Debt Instrument, Unamortized Discount | 68,005 | |
Debt instrument, Principal outstanding | 112,446 | $ 90,866 |
Debt instrument, Accrued interest outstanding | $ 4,942 | $ 3,192 |
NOTE 5 - DERIVATIVE LIABILITY18
NOTE 5 - DERIVATIVE LIABILITY: Fair Value, Assets and Liabilities measured on recurring basis (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Inputs, Level 1 | ||
Derivative Liability, Fair Value, Gross Asset | $ 0 | $ 0 |
Fair Value, Inputs, Level 2 | ||
Derivative Liability, Fair Value, Gross Asset | 0 | 0 |
Fair Value, Inputs, Level 3 | ||
Derivative Liability, Fair Value, Gross Asset | 318,596 | 238,674 |
Derivative Liability, Fair Value, Gross Asset | $ 318,596 | $ 238,674 |
NOTE 5 - DERIVATIVE LIABILITY (
NOTE 5 - DERIVATIVE LIABILITY (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Derivative Liability, Fair Value, Gross Asset | $ 318,596 | $ 238,674 |
Loss from derivative liability fair value adjustment | 19,814 | |
Fair market value adjustments related to convertible notes payable | $ 19,814 |
NOTE 5 - DERIVATIVE LIABILITY20
NOTE 5 - DERIVATIVE LIABILITY: Schedule of Derivative Liability Activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Derivative Liability, Balance, Start of Period | $ 238,674 | |
Derivative liabilities recorded | 21,580 | $ 87,366 |
Day one loss | 38,528 | 2,912 |
Change due to note conversion | 0 | 0 |
Loss on change in derivative fair value adjustment | 19,814 | 148,396 |
Derivative Liability, Balance, End of Period | $ 318,596 | $ 238,674 |